Court File and Parties

COURT FILE NO.: CV-14-512883 MOTION HEARD: 2020-02-06 REASONS RELEASED: 2020-05-07

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

Assumption Mutual Life Assurance Company and Royal Brokers Corporation Plaintiffs

• and-

Simon Wong, Nomed Inc., The Dot Network, Inc. and OM Financial Inc. Defendants

BEFORE: Master M.P. McGraw

COUNSEL: I. Eckler Email: ieckler@stikeman.com

• Counsel for the Plaintiffs, Assumption Mutual Life Assurance Company and Royal Brokers Corporation

A. Schorr Email: alfred@schorrlaw.ca

• Counsel for the Defendants Simon Wong, Nomed Inc. and The Dot Network, Inc.

REASONS RELEASED: May 7, 2020

Reasons for Endorsement

I. Introduction

[1] This is a motion by the Plaintiffs under Rule 48.14(5) of the Rules of Civil Procedure for a status hearing. The motion is opposed by the Defendants Simon Wong, Nomed Inc. (“Nomed”) and The Dot Network, Inc. (“DNI”)(collectively, the “Wong Defendants”).

II. The Parties, the Alleged Fraud and History of The Proceedings

The Parties

[2] The Plaintiff Assumption Mutual Life Assurance Company (“AML”) provides individual and group life insurance products and services. AML authorizes General Agents to sell insurance policies on its behalf pursuant to General Agent Contracts. The General Agents in turn authorize individual licensed insurance brokers to sell AML insurance policies to customers.

[3] In 2012, the Plaintiff Royal Brokers Corporation (“RBC”) was a Managing General Agent. From August 2010 until July 2012, RBC engaged the Defendant OM Financial Inc. (“OM”) as an Associate General Agent (“AGA”) pursuant to an Associate General Agent Agreement dated August 18, 2010 (the “AGA Agreement”).

[4] Mr. Wong was an individual licensed insurance broker and the sole director of Nomed and DNI. Between December 13, 2010 and July 3, 2012, Mr. Wong and Nomed sold AML policies through OM under the AGA Agreement. From July 2012 until October 24, 2012, Mr. Wong and Nomed sold AML policies through another Managing General Agent, PPI Solutions (Toronto Centre) Inc. (“PPI”). PPI is not a party to this action.

The Alleged Fraudulent Scheme

[5] Pursuant to the AGA Agreement, RBC paid commissions and bonuses to OM for AML policies sold through OM including those placed by Mr. Wong and Nomed. When a policy is placed, a commission is earned. Payment of the commissions is front-loaded with most of the amount paid up front and smaller amounts paid over the life of the policy. Under the AGA Agreement, OM was required to pay chargebacks to RBC for commissions paid for any policy terminated due to lapse or cancellation within its first two years. In turn, RBC was required to pay chargebacks to AML.

[6] The Plaintiffs allege that in October 2012, they uncovered a scheme perpetrated by the Wong Defendants in which Mr. Wong fraudulently sold AML policies to wrongfully collect significant up front commissions. The Plaintiffs allege that Mr. Wong advised potential customers that they did not have to pay premiums for 2 years to induce them to purchase policies. Mr. Wong would file customers’ applications with OM and collect the applicable commissions. To make it appear as if the policies were premium free, the Plaintiffs claim that the Wong Defendants used some of their commissions to pay premiums on behalf of customers. To do so, the Plaintiffs allege that Mr. Wong instructed OM to pay all commissions to Nomed, which in turn transferred funds to DNI which deposited the funds in policyholders’ bank accounts prior to the date when AML withdrew monthly premiums.

[7] The Plaintiffs allege that this scheme became more profitable as the Wong Defendants amassed a larger book of business and collected more commissions. The alleged scheme as it relates to policies sold by the Wong Defendants through PPI from July 2012 until October 24, 2012 appears to have been carried out in a similar manner.

[8] The Plaintiffs claim that the significant increase in Mr. Wong’s policy placement rate between April 2012 and October 2012 provides further evidence of this scheme. From January 2012 to March 2012, Mr. Wong issued a total of 138 policies. However, in each month from April 2012 until September 2012, Mr. Wong issued 100 or more policies including 144 in August 2012, 139 in May 2012 and a total of 724 policies for this six-month period.

[9] On October 2, 2012, two individuals advised an AML customer service call centre representative that Mr. Wong sold them policies in June 2012 by promising that they would not have to pay any premiums for the first 2 years. The callers also advised that monthly deposits and withdrawals were being made to their bank accounts. One of the callers subsequently sent a letter to AML dated October 15, 2012 on behalf of 4 family members stating that 2 female associates of Mr. Wong sold them policies in June 2012 on the basis that no premiums were payable for the first 2 years. The letter stated that they were asked to provide Mr. Wong with access to an empty bank account. The customers later noticed that monthly deposits were being made to the bank account under the description “payroll” with monthly automatic withdrawals by AML. The deposits were traced by their bank to DNL. The letter also states that Mr. Wong and the 2 female associates called them and attended at their home after they cancelled their policies. AML’s customer service representatives reported receiving similar calls about insurance policies sold by Mr. Wong.

[10] AML reported these complaints to PPI, the General Agent for Mr. Wong and Nomed at the time. The Plaintiffs allege that PPI sought an explanation from Mr. Wong who denied any knowledge of premium-free policies and advised that he purchased leads on potential customers from a network of individuals. He insisted that there was a miscommunication or misunderstanding between the customers and the individuals providing the leads and undertook to ensure that potential customers were properly informed.

[11] On October 24, 2012, AML terminated the agent code for Mr. Wong and Nomed to prevent them from placing further policies. AML was notified on October 25, 2012 that more than 220 premium payments for policies sold by Nomed had been declined for non-sufficient funds representing 26% of all policies sold by Mr. Wong. On October 26, 2012, AML reported Mr. Wong to the Financial Services Commission of Ontario.

[12] The Plaintiffs allege that Mr. Wong and Nomed ceased funding policy premiums and by late January 2013, substantially all policies they sold had lapsed or been terminated for non-payment of premiums. This in turn triggered chargebacks for the unearned portions of commissions paid in advance to the Wong Defendants.

[13] As part of its own investigation, AML obtained 2 Norwich Orders granted by Justice McEwan (the “Norwich Orders”). The first, dated March 8, 2013, ordered Royal Bank of Canada, CIBC, Scotiabank and TD Bank to produce all correspondence, computer data, documents and transaction records with respect to the Wong Defendants. The second, dated July 19, 2013 ordered ADP Canada Co. to disclose copies of all contracts, services agreements, earning statements, payroll registers and other records of transactions and activities of the Wong Defendants. All of the documents produced pursuant to the Norwich Orders have been preserved.

[14] The Plaintiffs allege that Mr. Wong and Nomed improperly received commissions and bonuses of $3,216,150 including $1,636,550 for policies sold during the time when OM was their AGA (the “OM Policies”) which OM guaranteed under the AGA Agreement. The Plaintiffs also claim that OM itself improperly received commissions of $552,425.

[15] Evidence filed by the Plaintiffs and referred to by both counsel shows that the Plaintiffs’ claims relate to approximately 887 policies, 486 of which are OM Policies, and 438 of which are policies they sold during the period when PPI was their General Agent (the “PPI Policies”, together with the OM Policies, the “Disputed Policies”). The alleged amount in commissions wrongfully collected by the Wong Defendants for the PPI Policies is approximately $1,579,650.

[16] The Plaintiffs commenced this action by Statement of Claim issued on September 25, 2014. As against OM, the Plaintiffs claim restitution and/or damages of $552,425 for breach of contract and unjust enrichment and $1,636,550 for breach of its guarantee. The Plaintiffs claim restitution and/or damages of $3,216,150 as against the Wong Defendants for unjust enrichment, deceit, misrepresentation, conversion and conspiracy.

[17] The Wong Defendants delivered their Statement of Defence and Counterclaim on October 28, 2014. AML delivered its Reply and Defence to Counterclaim on November 18, 2014. OM delivered its Statement of Defence and Crossclaim on January 19, 2015.

[18] The Plaintiffs subsequently requested that OM amend its Defence to remove references to without prejudice settlement discussions. OM refused and on October 16, 2015, AML brought a motion to strike certain paragraphs of OM’s Defence (the “Pleadings Motion”). The Pleadings Motion was originally scheduled to proceed on March 31, 2016. However, OM delivered substantial responding materials and on March 16, 2016, brought a summary judgment motion on the basis that this action was commenced after the passage of the applicable limitation period (the “Summary Judgment Motion”, together with the Pleadings Motion, the “Motions”).

[19] The Motions were scheduled to proceed on August 11, 2016. AML served responding materials for the Summary Judgment Motion on May 27, 2016 and reply materials for the Pleadings Motion on June 2, 2016. Before cross-examinations for the Motions could be conducted during the week of July 4, 2016, OM served an Amended Notice of Motion for the Summary Judgment Motion seeking judgment on additional grounds. On July 27, 2016, OM served a Notice of Application against AML, PPI, RBC and Nomed seeking, among other things, a declaration that OM and Nomed were discharged of all obligations for any debts or chargebacks for commissions and bonuses related to policies placed by Mr. Wong and Nomed (the “OM Application”).

[20] In December 2016, AML commenced global settlement discussions with OM. The parties reached a settlement in principle in August 2017 and OM’s counsel delivered draft settlement documentation in November 2017. After significant negotiations, the Plaintiffs and OM finalized their settlement in early July 2019 (the “OM Settlement”). Under the OM Settlement, the Plaintiffs made no financial recovery however, they are entitled to conduct an examination of Rahul Bhardwaj, OM’s principal when it was the AGA for Mr. Wong and Nomed.

[21] On July 3, 2019, Plaintiffs’ counsel contacted Wong Defendants’ counsel to discuss a consent timetable. This was the first time that the Plaintiffs had contacted the Wong Defendants since November 18, 2014. The Plaintiffs proposed that Affidavits of Documents be exchanged by January 31, 2020; examinations for discovery be completed by March 31, 2020; and the action be set down for trial by July 31, 2021. Counsel for the Wong Defendants’ advised on July 12, 2019 that they would not consent to a timetable.

[22] The Plaintiffs brought this motion on September 6, 2019, approximately 20 days before the expiry of the 5-year deadline under Rule 48.14(1) of the Rules of Civil Procedure. The motion first came before me on December 13, 2019. The Wong Defendants did not file any responding materials. The Wong Defendants advised that they would not be filing any affidavit evidence, however, I was of the view that a responding Factum was required and adjourned the motion.

III. The Law and Analysis

Generally

[23] Rule 48.14 of the Rules of Civil Procedure states:

(1) Unless the court orders otherwise, the registrar shall dismiss an action for delay in either of the following circumstances, subject to subrules (4) to (8):

1. The action has not been set down for trial or terminated by any means by the later of the fifth anniversary of the commencement of the action and January 1, 2017.

(5) If the parties do not consent to a timetable under subrule (4), any party may, before the expiry of the applicable period referred to in subrule (1), bring a motion for a status hearing.

(6) For the purposes of subrule (5), the hearing of the motion shall be convened as a status hearing.

(7) At a status hearing, the plaintiff shall show cause why the action should not be dismissed for delay, and the court may,

(a) dismiss the action for delay; or

(b) if the court is satisfied that the action should proceed,

(i) set deadlines for the completion of the remaining steps necessary to have the action set down for trial or restored to a trial list, as the case may be, and order that it be set down for trial or restored to a trial list within a specified time,

(ii) adjourn the status hearing on such terms as are just,

(iii) if Rule 77 may apply to the action, assign the action for case management under that Rule, subject to the direction of the regional senior judge, or

(iv) make such other order as is just.

[24] The applicable test on a motion for a status hearing under Rule 48.14(5) of the Rules of Civil Procedure is two-fold and conjunctive. The plaintiff bears the onus of demonstrating that: i.) there was an acceptable explanation for the delay; and ii.) that if the action were allowed to proceed, the defendant would suffer no non-compensable prejudice (Faris v. Eftimovski, 2013 ONCA 360 at para. 32; 1196158 Ontario Inc. v. 6274013 Canada Ltd., 2012 ONCA 544 at para. 32; Kara v. Arnold, 2014 ONCA 871 at para. 9; Carioca’s Import & Export Inc. v. Canadian Pacific Railway Limited, 2015 ONCA 592 at para. 43).

[25] The plaintiff bears the onus to show cause why the action should not be dismissed for delay (Faris at para. 33). The focus of the court’s inquiry is on the conduct of the plaintiff who, as the party who commenced the proceeding, bears primary responsibility for its progress (Faris at para. 33; 1196158 Ontario Inc. at para. 29). The conduct of a defendant may be relevant, such as where a plaintiff who tries to move an action along is faced with some resistance or tactics that are not consistent with a willingness to see a relatively straightforward case proceed expeditiously (1196158 Ontario Inc. at para. 29).

[26] Although the court must be guided by the applicable two-part test, the determination as to whether to allow the action to proceed is discretionary and determining whether it would be unfair for the action to be dismissed requires a consideration of the circumstances and a balancing of the parties’ respective interests (Koepcke v. Webster, 2012 ONSC 2200 at para. 22; Carioca’s at para. 43). As such, the failure to satisfy both criteria, and in some cases, even one of the criteria, may not be fatal to a plaintiff’s motion for an extension (Koepecke at para. 36; Cobalt Capital CA Textile Investments, L.P. v. Pantziris, 2017 ONSC 4664 at paras. 1-2; Apotex Inc. v. Relle, 2012 ONSC 3291 at paras. 30-37). To require a plaintiff to meet both factors without considering the context of the case is contrary to the general principle that the court should exercise its discretion to dismiss a claim in a manner consistent with the just result between the parties (Koepecke at paras. 22-23; Cobalt at paras. 1-2; Apotex at para. 35).

[27] While the court does not take a rigid or purely formalistic approach to the application of timelines that would penalize parties for technical non-compliance and frustrate the fundamental goal of resolving disputes on their merits, Rule 48.14 of the Rules of Civil Procedure was designed to have some “teeth” (Kara at para. 10). In doing so, the court must apply a contextual approach weighing all of the relevant factors to determine the order which is just in the circumstances (Kara at paras. 12-14; Cobalt Capital CA Textile Investments, 2017 ONSC 4664 at para. 46).

[28] There are two competing principles within the context of a disposition without trial which arise from Rule 1.04(1) of the Rules of Civil Procedure: the public interest in timely justice and discouraging delay and permitting actions to be determined on their merits (Faris at para. 24; Koepecke at para. 23). The Court of Appeal has explained this balancing as follows:

“Dismissals for delay involve a careful balance between two competing values. On the one hand, the Rules of Civil Procedure need to be enforced in a way that ensures timely and efficient justice, in the interests of plaintiffs, defendants, and society in general. On the other hand, society in general, and the parties, have an interest in the resolution of disputes on their merits and in the availability of flexibility to avoid potentially draconian results, by providing the opportunity for parties to offer a reasonable explanation for delay when it takes them beyond established timelines.” (Kara at para. 9)

[29] The Court of Appeal has also provided the following guidance with respect to determining matters on their merits:

“Expeditious justice must be balanced with the public interest in having disputes determined on their merits. Where, despite the delay, the defendant would not be unfairly prejudiced should the matter proceed for resolution on the merits, according the plaintiff an indulgence is generally favoured.” (Marché d'Alimentation Denis Thériault Ltée. v. Giant Tiger Stores Ltd. (2007), 2007 ONCA 695, 87 O.R. (3d) 660 (O.C.A.) at para. 34).

[30] For the reasons that follow, I have concluded that the Plaintiffs have shown cause why their claims arising from the OM Policies should be permitted to proceed but not their claims with respect to the PPI Policies. In concluding that this is the just and fair result in the circumstances, I have applied a contextual approach considering all of the relevant circumstances including how the Disputed Policies were sold and the commissions were paid, the Plaintiffs’ efforts regarding the OM Policies and the OM Settlement contrasted with the PPI Policies and the potential prejudice. Considered together and balancing the relevant interests and values, I conclude that this result, as opposed to an all or nothing remedy, is reasonable and appropriate in the circumstances.

Is There An Acceptable Explanation For the Delay?

[31] What the court determines to be an “acceptable” explanation is case dependent (Koepecke at para. 22). The terms “acceptable”, “satisfactory” and “reasonable” are interchangeable in this context (Carioca’s at para. 45). A plaintiff is required to provide a “cogent” explanation for the delay and will necessarily require more explanation where the period is longer, such as the 5-year period under the amended Rule 48.14 of the Rules of Civil Procedure (Postmedia Network Inc. v. Meltwater Holding B.V., 2017 ONSC 6036 at paras. 13-15). An “acceptable” explanation does not mean that the Plaintiffs must provide a “good” explanation, only an “adequate” or “passable” one (2046085 Ontario Inc. v. Raby, 2014 ONSC 774 at para. 6; Greenwald v. Ridgevale Inc., 2016 ONSC 3031 at para. 17). The progress of an action does not have to be ideal and the court is not to conduct a week by week or month by month analysis (Goldman v. Pace, 2017 ONSC 1797 at para. 5; Greenwald at para. 17; Carioca’s at para. 46).

[32] The Plaintiffs have taken no steps to advance the litigation directly against the Wong Defendants. Affidavits of Documents have not been exchanged and examinations for discovery have not been conducted. In addition, Plaintiffs’ counsel did not communicate with Wong Defendants’ counsel at all between November 18, 2014 and July 3, 2019, a period of over 4 years and 7 months.

[33] The Plaintiffs advance two explanations for the delay in moving their action forward as against the Wong Defendants. First, the Plaintiffs submit that the delay from October 2015 until December 2016 due to the Motions and the OM Application was necessary and demonstrates that they did not neglect these proceedings (Joseph Carbery v. St. Michael’s Hospital, 2018 ONSC 1617 at para. 53; Raby at paras. 10-12). The Plaintiffs submit that with multiple defendants, it was reasonable and necessary to address the preliminary issues with OM first while not pursuing their action as against the Wong Defendants who were not affected by the preliminary issues (Raby at para. 12).

[34] Second, the Plaintiffs argue that although settlement discussions with OM delayed their action against the Wong Defendants from December 2016-July 2019, the OM Settlement has advanced the proceedings and simplified the litigation. They also assert that it demonstrates their intention to pursue their claims against the Wong Defendants while avoiding costs to the parties until it became necessary (Greenwald at para. 17; Apotex at paras. 67-68; Koepecke at para. 37). The Plaintiffs submit that securing the right to examine Mr. Bhardwaj as a term of the OM Settlement has also advanced the litigation as it should provide them with evidence for their claims against the Wong Defendants.

[35] I am satisfied that the Plaintiffs have provided an acceptable, reasonable and cogent explanation for the delay with respect to their claims as against the Wong Defendants arising from the OM Policies. Although the Plaintiffs took no steps directly against the Wong Defendants, their efforts with respect to OM have moved this action forward as it relates to their claims arising from the OM Policies while demonstrating their intention to pursue these claims.

[36] I accept that it was reasonable and necessary for the Plaintiffs to first address the Motions and the OM Application. Most of the steps involved were initiated by OM and all of them related to the OM Policies. In my view, it was also reasonable for the Plaintiffs to then pursue global settlement discussions with OM which were successful in resolving their claims as against OM with respect to the OM Policies and carried the possibility that the Plaintiffs may have had no claims regarding the OM Policies to pursue against the Wong Defendants. These efforts, which resulted in the OM Settlement, demonstrate the benefits of parties pausing the proceedings to pursue settlement while avoiding litigation costs which may make settlement more challenging later on (Postmedia at para. 18). Notwithstanding the extended period of time required to finalize the OM Settlement, it has streamlined the litigation and is consistent with the most cost-effective and expeditious resolution of this action. Securing the examination of Mr. Bhardwaj should also provide the Plaintiffs with additional evidence to advance their claims with respect to the OM Policies against the Wong Defendants and reflects their intention to pursue these claims.

[37] However, in my view, the Plaintiffs have not provided an acceptable explanation for the delay related to their claims as against the Wong Defendants arising from the PPI Policies. There is no evidence that the Plaintiffs have taken any steps in this litigation with respect to the PPI Policies. I disagree with the Plaintiffs’ submission that it was not possible to advance their action with respect to the PPI Policies or in any way address these claims until they first addressed the Motions and the OM Application and pursued a settlement with OM. None of the steps with respect to OM are related to the PPI Policies. As the Plaintiffs elected not to name PPI as a Defendant, the Wong Defendants are the only parties to this action from whom the Plaintiffs can recover any amounts arising from the PPI Policies. Approximately $1.6 million or 50% of the Plaintiffs’ claim relates to the PPI Policies. Given the absence of another party to pursue, the passage of over 4.5 years, the significant amount claimed and the serious allegations made against the Wong Defendants, the Plaintiffs have not provided an adequate explanation for the delay and why they did not address the PPI Policies or communicate with the Wong Defendants regarding these claims.

[38] The Plaintiffs submit that they were not obligated to spend every litigation resource against the Wong Defendants (Bank of Montreal v. Papadogambros, 2013 ONSC 1941 at para. 7). This reasoning may apply to the OM Policies but not the PPI Policies. In the passage from Papadogambros cited by the Plaintiffs, Master Glustein held that it was reasonable for BMO to proceed against other defendants in related actions for short periods of time without spending every litigation resource against the moving defendants. In the present case, there are no related actions, no party other than the Wong Defendants to pursue for the PPI Policies and the Plaintiffs have not taken any steps as against the Wong Defendants for a significant period of time. In my view, it would not have been unduly onerous and or involved significant costs for the Plaintiffs to take even minimal steps to address the PPI Policies over this significant period of time in question. Had they done so, my conclusions regarding the PPI Policies may have been different.

Would the Wong Defendants Suffer Non-Compensable Prejudice?

[39] The Plaintiffs bear the onus of demonstrating that the Wong Defendants would not suffer actual prejudice as a result of the overall delay if this action is permitted to proceed (1196158 Ontario Inc. at para. 32). The prejudice at issue is the Wong Defendants’ ability to defend the action as a result of the Plaintiffs’ delay, not due to the sheer passage of time (Carioca’s at para. 57; H.B. Fuller Company et al. v. Rogers (Rogers Law Office), 2015 ONCA 173 at para. 37).

[40] While there are deficiencies and gaps, I conclude that the Plaintiffs have provided some evidence which is sufficient to satisfy their onus that the Wong Defendants would not suffer any actual prejudice if the Plaintiffs’ claims are permitted to proceed, particularly related to the OM Policies. To the extent to which a presumption of prejudice arises, the Plaintiffs have rebutted it.

[41] The Wong Defendants submit that due to fading memories resulting from the inordinate length of time which has passed since the events at issue occurred, actual prejudice would result and a presumption of prejudice arises (1196158 Ontario Inc. at paras. 42-44). The Wong Defendants further claim that given the nature of the Plaintiffs’ claims and the large number of Disputed Policies, the Plaintiffs will require many former policyholders as witnesses regarding the alleged misrepresentations made by Mr. Wong. Since the Plaintiffs have provided no evidence regarding the availability of any former policyholders to testify as witnesses, the Wong Defendants argue that this would lead to actual prejudice.

[42] Although I accept that the Plaintiffs’ evidence regarding witnesses is lacking, I cannot conclude that actual prejudice would result if this action is permitted to proceed. This is document heavy litigation which involves a substantial number of standard form applications, information forms, policies and contracts together with bank records and related documents. A significant number of key documents have been preserved, including the documents produced through the Norwich Orders, the Plaintiffs’ documents, OM’s documents and those which the Wong Defendants were obligated to preserve. It is also helpful that the Plaintiffs have conducted their own investigation (Business Development Bank of Canada v. I Inc., 2013 ONSC 1749 at para. 20).

[43] The Plaintiffs’ evidence of potential witnesses is not particularly compelling. It consists of Mr. Bhardwaj’s forthcoming examination, some evidence of the customers who complained and wrote to AML in 2012 and AML’s call centre employees who received the complaints. The Plaintiffs acknowledge that they have made no efforts to determine if any policyholders are available to testify.

[44] Having considered the relevant factors and circumstances, I am not satisfied that the lack of evidence regarding witnesses establishes that actual prejudice would result with respect to the OM Policies. The Plaintiffs are seeking restitution and/or damages from the Wong Defendants for deceit, misrepresentation, conversion, conspiracy and unjust enrichment. These claims are based on a voluminous amount of insurance documents and bank records. It is not clear to me, at this early stage of the litigation and on the current record, given the nature of the allegations and the substantial documentation which has been preserved, that significant oral evidence from former policyholders will be necessary for all of the Plaintiffs’ claims. For example, oral evidence from former customers and/or policyholders may not be necessary or essential in proving unjust enrichment. This will become clearer as the parties complete documentary and oral discoveries. For the purposes of this motion, I am satisfied that the Plaintiffs have provided some evidence with respect to witnesses related to the OM Policies which is sufficient in the present circumstances. In arriving at this conclusion, I adopt the Court of Appeal’s comments in Carioca’s:

“I do not accept that speculation that a case may depend in part on oral evidence, coupled with the assumption that witnesses' memories generally fade over time will, without more, prevent a plaintiff from satisfying the prejudice prong of the test. Counsel routinely address the reality of the passage of time in the litigation process by collecting and producing documents, undertaking oral examinations for discovery and taking witness statements. There are other methods under the rules to preserve evidence that may disappear or be lost before trial.” (Carioca’s at para. 76)

[45] Witnesses’ memories can also be refreshed from the large amount of documentation which is available (Key Anlouis Investments Limited v. 800246 Ontario Inc., 2018 ONSC 5895 at para. 29). Further, to the extent to which the Plaintiffs cannot produce sufficient oral evidence, they risk that some or all of their claims will fail at trial (Greenwald at para. 18).

[46] With respect to the PPI Policies, the Plaintiffs have provided no evidence regarding witnesses. Similar to the OM Policies, significant documentation has been preserved. However, all of the Plaintiffs’ evidence on witnesses relates to the OM Policies. While not determinative of my conclusion that claims with respect to the PPI Policies should not be allowed to proceed, it is one more factor which does not support an extension.

Further Contextual Factors and Balancing of Interests and Values

[47] I acknowledge that it is not usually the case on a status hearing that some claims are permitted to proceed while others are not. However, considering the circumstances of this case and the Plaintiffs’ claims, the delay and the potential prejudice contextually, I am satisfied that this is the just result in the circumstances which reflects a proper balancing of the interests and values at issue. Quite simply, the present case does not call for an all or nothing all remedy.

[48] The Plaintiffs’ failure to contact the Wong Defendants for over 4 years and 7 months militates against permitting this action to continue. By not communicating with the Wong Defendants, the Plaintiffs unilaterally held this action as against the Wong Defendants in abeyance for a significant period of time. The decision to hold an action in abeyance must be made with the defendant’s knowledge and consent or by order of the court (Koepcke at paras. 28-30). This kind of “radio silence” can be fatal to a plaintiff on a status hearing (Unlimited Motors Inc. v. Automobili Lamborghini Spa, 2019 ONSC 1423 at para. 10). This was not reasonable in the circumstances and the Plaintiffs have not provided an acceptable or adequate explanation. I reject the Plaintiffs’ urging to put any weight on the fact that the Wong Defendants did not contact them. There is no evidence that the Wong Defendants did anything to prevent the litigation from proceeding and the focus must remain on the conduct of the Plaintiffs who are primarily responsible for moving their action forward.

[49] However, when balanced against the other contextual factors, I am satisfied that the Plaintiffs’ failure to communicate with the Wong Defendants should not result in the dismissal of their claims related to the OM Policies. Without the Motions, the OM Application and the OM Settlement, the result may have been different. The collective weight of the Plaintiffs’ efforts, particularly their good faith pursuit of the OM Settlement, favours an extension. This is the first request for an extension, where the Plaintiffs have made reasonable efforts to advance their claims and have adequately addressed actual prejudice regarding the OM Policies. As such, fairness and a proper balancing of the parties’ interests and the public interest, dictates that the Plaintiffs’ claims related to the OM Policies should be determined on their merits.

[50] Conversely, the absence of any efforts and/or an acceptable explanation for the Plaintiffs’ inactivity related to the PPI Policies leads me to the opposite conclusion with respect to these claims. The Plaintiffs chose not to name PPI, leaving the Wong Defendants as the only defendants with respect to the PPI Policies. As set out above, I do not accept that the Plaintiffs could not have taken any steps to deal with their claims arising from the PPI Policies for over 4.5 years. Given that the Wong Defendants are the only potential sources of recovery, it would have been reasonable in the circumstances for the Plaintiffs to, at the very least, communicate with the Wong Defendants regarding the PPI Policies. In my view, the analysis is different from the OM Policies, where the Plaintiffs were forced to deal with and able to settle with OM.

[51] While justness requires a consideration of costs to the parties, the costs of dealing with the PPI Policies in even a minimal way would not have been significant or prohibitive. To do so would have been consistent with the efficient and expeditious disposition of this litigation (H.B. Fuller at para. 42). This is not a case where the Plaintiff’s delay, the lack of any progress and the absence of evidence of intention results from counsel’s error or inadvertence, rather, it was an intentional decision (H.B. Fuller at para. 27). In this context, the balancing of values and interests favours the Wong Defendants’ rights to timely justice, particularly given the serious allegations made against them and the significant period of time which passed.

IV. Disposition

[52] In the circumstances, I conclude that the following Order is just, fair and properly balances all of the relevant interests and values consistent with the most cost effective and expeditious disposition of this action under Rule 1.04(1) of the Rules of Civil Procedure:

i.) the Plaintiffs’ action with respect to the OM Policies shall proceed;

ii.) the Plaintiffs’ action with respect to the PPI Policies shall not proceed;

iii.) the parties shall adhere to the following timetable which may be amended by consent of the parties except that the set down date shall only be amended by further order of the court:

a.) June 30, 2020: Plaintiffs deliver an Amended Statement of Claim;

b.) July 31, 2020: Wong Defendants deliver an Amended Defence and Counterclaim;

c.) October 31, 2020: parties exchange Affidavits of Documents;

d.) January 31, 2021: completion of examinations for discovery;

e.) March 30, 2021: delivery of answers to undertakings;

f.) May 31, 2021: scheduling of motions arising from discovery, if any;

g.) September 30, 2021: deadline for mediation;

h.) October 1, 2021: deadline to set this action down for trial.

[53] Given the ongoing shutdown of regular court operations due to the Covid-19 pandemic, this Order is effective forthwith without the requirement for filing and entry. However, the parties may file a form of Order with me by email through the Masters’ Administration Office if they wish to do so. The parties may also schedule a telephone case conference with me if they wish to speak to the terms of this Order. I shall remain seized of this matter and the parties may contact me if they require case management going forward.

[54] If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed 3 pages (excluding Costs Outlines) with me through the Masters’ Administration Office on a timetable to be agreed upon by counsel.

Released: May 7, 2020 Master M.P. McGraw